[E-Daily Reporter Park Sun-Yeop ] Forecasts indicate that SK Innovation will post second-quarter earnings this year that exceed market expectations, driven by a surge in profits from its lubricant base oil business. With refining margins improving and a continued shortage of high-grade lubricant base oil, the company’s annual operating profit is also expected to reach a record high this year.
In a report released on the 16th, Yoon Jae-sung, an analyst at Hana Securities, projected SK Innovation’s ( SK Innovation(096770)) second-quarter revenue at 30.4859 trillion won—a 44.2% increase from the same period last year—and operating profit at 1.8091 trillion won. Operating profit is expected to turn from a loss in the same period last year to a profit, exceeding market forecasts of 1.4936 trillion won by 21.1%.

Analysts predict that even if profits in the petroleum, chemicals, and SK E&S segments decline compared to the previous quarter, improved performance in the lubricant base oil segment will largely offset this decline. The lubricant base oil segment’s second-quarter operating profit is estimated at 950.9 billion won, a 606.4% increase year-over-year, with an operating margin reaching 40.7%.
All lubricant base oils produced by SK Innovation consist of high-grade Group III products. Given that at least 10% of the global supply of Group III lubricant base oils is expected to remain disrupted until the first half of next year due to setbacks at the Qatar Pearl liquefied petroleum gas (LPG) facility, high profitability is projected to continue for the time being.
Operating profit for the petroleum business in the second quarter is projected at 881.9 billion won. This figure is estimated to be 56% lower than the previous year, reflecting inventory-related losses due to the sharp drop in oil prices, the lag effect where falling raw material prices are reflected in product prices with a delay, and the impact of domestic price caps.
The deficit at SK On, the battery subsidiary, is expected to narrow. Analysts project that the second-quarter operating loss will be 272.8 billion won—an improvement of 76.4 billion won from the previous quarter—driven by expanded production and sales volumes, as well as increased benefits from the U.S. Advanced Manufacturing Production Tax Credit. Since SK Enmove, which was in charge of the lubricant base oil business, was absorbed by SK On and is now operated as an independent business unit within the company, the boom in the lubricant base oil market is expected to help alleviate SK On’s financial burden.
Hana Securities raised its estimate for SK Innovation’s full-year operating profit this year by 62.3%, from 4.0207 trillion won to 6.5248 trillion won. This represents a 1,504.7% year-over-year increase and is a record high. The estimate for next year’s operating profit was also raised by 60.7%, from 3.8657 trillion won to 6.2103 trillion won.
Strong refining margins and falling crude oil prices from oil-producing countries were also cited as factors improving the profits and valuations of domestic refining companies. Although SK Innovation has approximately twice the refining and paraxylene production capacity of S-Oil and about three times the Group III lubricant base oil production capacity, the gap in market capitalization between the two companies has recently narrowed to between 2 trillion and 3 trillion won.
Analyst Yoon assessed that, considering the value of the merger with SK E&S and its oil exploration and production business, SK Innovation’s enterprise value is excessively low compared to S-Oil. Accordingly, he maintained a “Buy” rating and raised the target price from 170,000 won to 200,000 won.
TerraPower, a next-generation small modular reactor (SMR) company, was also cited as a medium- to long-term growth driver. SK Innovation is estimated to hold approximately a 5% stake in TerraPower. Considering the enterprise values of competitors X-Energy and Oklo, the value of SK Innovation’s stake was estimated at approximately 600 billion won.
TerraPower is developing “Sodium,” a next-generation sodium-cooled fast reactor. The company aims to complete its first unit by 2030 and begin commercial operation in 2031. It has already secured 12 projects in the U.S., eight of which are understood to be part of a collaboration with Meta.
Researcher Yoon stated, “Based on its experience in the U.S. market, SK Innovation is expected to meet the power demand of domestic AI data centers and the semiconductor and steel industries starting in the mid-2030s, and subsequently pursue entry into the Southeast Asian market,” adding, “Considering the strength of its absolute earnings and its relative value compared to competitors, now is the time to buy.”